Revenue and Income - For the year ended December 31, 2024, total revenue decreased by 13.21% to 17,562,903 in 2023[190] - Account fee income declined by 25.16% to 8,614,945, primarily due to a reduction in the number of accounts and average monthly ending deposit balance[190] - Loan interest income increased significantly by 122.90% to 2,972,434 in 2023[190] - Investment income from PCCU decreased from 1,903,422 in 2024, resulting in a reduction of investment hosting fees from 457,105[196] - The revenue from the Commercial Alliance Agreement for the year ended December 31, 2024, was 10,761,245 for the year ended December 31, 2023, reflecting an increase of approximately 17.1%[267] Account and Deposit Metrics - Average monthly ending deposit balance decreased by 42.49% to 204,923,090[182] - The average active accounts dropped by 18.78% to 757 from 932[182] - The average account balance decreased by 29.16% to 219,835[182] - CRB related deposits as of December 31, 2024, were 129,350,998 as of December 31, 2023[267] Expenses and Financial Performance - Adjusted EBITDA for 2024 was 3,607,681 in 2023, attributed to decreased account fee income and higher professional expenses[177] - Total operating expenses were reduced by 38,293,952 in 2023 to 1,052,693, down from 4,888,769 in 2023 to 430,477 in cash from operations in 2024, an improvement from cash used of 983,833 at the end of 2024, compared to a deficit of 561,346, from 533,390 in 2024, primarily due to restructuring of obligations[206] - The Company has renegotiated its senior secured loan with PCCU, deferring principal payments for February and March 2025[222] - The Company modified the outstanding principal of 6,437,050 in cash flow, significantly improving liquidity[223] - As of December 31, 2024, the Company reclassified short-term obligations of the PCCU Note totaling 6.06 million due to the fair value of the asset group being lower than its carrying amount[243] - Impairment charges of 0.05 million for customer relationships, and $2.99 million for developed technologies were also recorded[244] - The Company identified material weaknesses in internal controls over financial reporting as of December 31, 2024[251] Strategic Initiatives and Future Outlook - The company anticipates a reversal of the trend in account numbers as it focuses on its lending program[182] - The Company has implemented stock-based compensation to attract talent, alongside cost reductions through lower headcount and operational spending[225] - Management has substantial doubt about the Company's ability to continue as a going concern for at least twelve months from the issuance of the financial statements[226] - The Amended Commercial Alliance Agreement extends the term through December 31, 2028, with automatic two-year renewal periods[263] - Under the Amended CAA, the Company will pay a single asset hosting fee calculated as 0.01 multiplied by the average daily balance of account relationships[266] - The Company is classified as an emerging growth company, allowing it to delay adopting new accounting standards until they apply to private companies[250] Compliance and Regulatory Matters - The company successfully navigated over 16 state and federal banking exams, ensuring compliance in a regulated environment[167] - The Company’s obligations under the PCCU CAA include paying 25% of investment earnings as a hosting fee to PCCU[262] - The deferred consideration from the Abaca acquisition is accounted for as a derivative liability, with fair value assessments influenced by stock price and market conditions[249] - The Company utilizes a Monte-Carlo Simulation for the valuation of forward purchase derivatives, maintaining the established valuation for 2023 and 2024[241]
SHF (SHFS) - 2024 Q4 - Annual Report